Venture Capital Fund - Grovest Energy - Section 12J tax incentive

[rendan]

Hi All,

I was wondering if anyone has investigated the Venture Capital side of things on here. Of particular interest to me is Grovest Energy, and maybe Kalon. Kalon has a good board, Grovest Energy seems like a good space to get into but i don't know the board as much. SARS incentivises investment into Venture capital funds by taking off the full investment amount from your taxable income. An example below (all hypothetical numbers).

Your annual salary is R1m and your usual tax is R300k for the year. You invest R400k into one of these funds, and your taxable income becomes R600k instead of R1m, and you can claim that differential back. so assume your new tax calc is R140k, you get R160k as part of the tax refund. (numbers are back of the envelope calcs and would obviously not be very accurate, just trying to get the principle accross).


If you're sitting on a high salary, you would get 41% of your investment back in Tax refunds.

So let me know if anyone has heard of this, invested in it and what you think of the Grovest Energy fund in particular.

*note that you must leave the money in the fund for a minimum of 5 years.

 

[HavocXphere]

Shark Tank!

Let's see if we've got any legit VCs on the forum. Who can tell me what's the flaw with this?

Hint - something that should be there is not.

 

[HavocXphere]

Nobody? Fine...

The hurdle rate in the waterfall is completely missing which is quite odd at best and inappropriate in a high inflation environment. Meaning that the fund can do -6% real returns (or whatever inflation is) and the managers receive a performance fee for that.

Don't mess with stuff you don't understand kids

 

[krycor]

Another problem if I recall correctly is that you still pay the standard income tax and get rebates post fact. Ie unless you can float this value.. it’s a lot.

 

[FrankieK]

Shark Tank!

Let's see if we've got any legit VCs on the forum. Who can tell me what's the flaw with this?

Hint - something that should be there is not.

I'll see myself out.